Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
October 18, 2022, the Company entered into a Reorganization Agreement (“Reorganization Agreement”) with Tigress Holdings,
LLC, a limited liability company organized under the laws of Delaware (“Tigress Holdings”), whereby the Company exchanged
seven percent (7%) of the outstanding membership interests in Tigress Holdings for all of Tigress Holdings’ ownership interest
in the Company’s subsidiary RISE Financial Services, LLC, a limited liability company organized under the laws of Delaware (“RISE”).
The Company intends to sell its remaining interest in Tigress Holdings, representing seventeen percent (17%) of the outstanding membership
interests in Tigress Holdings, to Gloria E. Gebbia for a consideration to be determined subject to an independent fairness opinion. Gloria
E. Gebbia is a director and controlling shareholder of the Company.
Pursuant
to the Reorganization Agreement, Cynthia DiBartolo, the Chief Executive Officer and controlling owner of Tigress Holdings, will resign
from her position as Chief Executive Officer and board member of RISE and will not stand for re-election to the Company’s board
of directors.
Concurrent
with the Reorganization Agreement, RISE entered into a Termination Agreement (“Termination Agreement”) with Hedge Connection,
Inc., a corporation organized under the laws of Florida (“Hedge Connection”), and its Chief Executive Officer and principal
shareholder, Lisa Vioni. Pursuant to the Termination Agreement, the parties terminated the Purchase Agreement, dated January 21, 2022,
by and among the parties. Under the terms of the Termination Agreement, the Company will re-convey to Hedge Connection, Hedge Connection
common stock representing twenty percent (20%) of Hedge Connection and the related option from Ms. Vioni to acquire 100% of Ms. Vioni’s
remaining interest in Hedge Connection.
The
Termination Agreement also terminates the Hedge Connection technology license agreement, and terminates a voting agreement with Ms. Vioni
providing the Company with the right to appoint one director to the board of directors of Hedge Connection. Pursuant to the Termination
Agreement, Ms. Vioni will resign from her position from the Board of Directors of RISE, as well as the President of RISE Prime –
Capital Introduction, a division of RISE.
Under
the Termination Agreement, Ms. Vioni shall become a registered representative of the broker-dealer subsidiary of Tigress Holdings, Tigress
Financial Partners, LLC, a limited liability company organized under the laws of Delaware (“Tigress Financial”), and RISE
shall assign to Tigress Financial prospective prime brokerage customers of RISE who were solicited by RISE from January 1, 2022 through
the closing date of the Reorganization Agreement. In exchange, Tigress Financial will split revenue with RISE on certain customers pursuant
to the Reorganization Agreement.
As
of the date of this Current Report, the Company is assessing the financial impact of these transactions which may result in a material
one-time charge to the Company’s financial statements.